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First indications suggest a robust start to 2023 for ServiceNow

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© Reuters. First indications suggest a robust start to 2023 for ServiceNow (NOW) – Morgan Stanley

By Sam Boughedda

In its monthly federal business tracker note for January, focused on software stocks, Morgan Stanley analysts positively highlighted ServiceNow (NYSE:).

The analysts revealed that its Software Federal Business Tracker indicated that “muted” December trends continued into January. However, they noted that company-specific commentary and contract announcements “may indicate idiosyncratic momentum on the federal opportunity.”

Focusing on Service now, the analysts said the company highlighted strong demand in the federal vertical in the fourth quarter, with government net new ACV reportedly growing more than 50% year-over-year in the fourth quarter.

“First indications for 2023 suggest a robust start to the year with ~$15 million in new award value already booked during January (versus ~$43 million for all of 1Q22, which was a strong quarter relative to average seasonal growth),” wrote analysts, who have an Overweight rating on the stock.

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